SSAR Bond: World Bank’s US$8bn five-year sustainable development bond

IFR Awards 2020
3 min read
David Cheetham

Pushing boundaries

In a year that was dominated by the Covid-19 pandemic the ability of sovereigns, supranationals and agencies to raise funds quickly and in size was paramount, especially in the early stages of the crisis.

Few institutions had as much responsibility towards capital markets funding after global lockdowns were imposed than the World Bank Group, which announced a US$160bn coronavirus financing package in April. The supranational, in the form of the IBRD, immediately started the ball rolling with a record-breaking US dollar benchmark.

The US$8bn five-year sustainable development bond became the largest US dollar supranational primary issue, comfortably surpassing the previous record of US$6bn.

“They had promised a few days before US$160bn of Covid support,” said Lee Cumbes, head of public sector debt for EMEA at Barclays.

“That seemed a lot of money, people didn’t know how they were going to do it. But in one single deal, raising US$8bn, it brought home to the market what could be done, it made it very real and added hugely to confidence.”

With a record book for the issuer of US$12.5bn, it was clear affirmation of investors’ support for the World Bank and other multilaterals.

"We were ecstatic with the level of support and enthusiasm from so many investors around the world," Andrea Dore, head of funding, World Bank Treasury, said at the time.

"We counted over 300 unique investors, including investors we hadn’t seen in our order books before."

In a sign of the times, the deal offered a 3bp-4bp new issue concession after pricing at 24bp over mid-swaps. But as became clear during that initial stage of the crisis, concessions were a necessity to ensure that deals got done without any hiccups. A poor trade at that time would have been a huge setback for the market.

In fact, the deal got a notably stronger result than the issuer’s previous outing six weeks earlier, also a Global five-year, before the Covid-19 crisis all but closed primary markets.

Not only was it more than twice the size of the US$3.5bn offering at the start of March but the order book was more than three times bigger than the US$4bn for the previous deal.

The US$8bn deal was the first of four transactions the World Bank executed that week.

They were reminders of how big the World Bank's financial firepower is and that its remit is to deal with exactly the sort of crisis the world faced in 2020.

Barclays, Bank of Montreal, Citigroup and TD Securities were the leads.

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